Wednesday, February 17, 2010

The Georgian example

Daniel Hannan writes this morning that Georgia is moving towards a freer economy by moving in a libertarian direction:

The aristocrats of the Caucasus recently adopted something called the Liberty Act, which limits their deficit to 3 per cent of GDP and their public debt to 60 per cent. The proportion of economic activity generated by the state is capped by law at 30 per cent, and the number of government licences and permits is likewise restricted. At the same time, control of public services, including healthcare and education, is shifted from state to citizen.

Result? Georgia�s GDP is flourishing despite the Russian embargo and the recent war, and the country has continued to grow through the downturn.

Using the shortcut measure of economic freedom from the Heritage Foundation, Georgia does very well compared to its peers, though Heritage reports government spending as a share of GDP at 34% rather than 30. It ranks ahead of Vaclav Klaus' Czech Republic on that scale and 26th in the world.

With the U.S. going backwards -- Canada is now freer -- a few contenders for public office here would do well to consider the Georgian example. The Liberty Act contains a hard law requiring referenda on tax increases, and does not permit progressive taxation. The spending provisions are a bit more lax than ones we have discussed on this blog, but at least norm behavior to no greater than 3% deficits, 30% government share of GDP (at all levels) and a 60% debt-to-GDP ratio. May Mr. Saakashvili visit D.C. next!

Monday, August 18, 2008

Georgia: Reaction times

It is becoming increasingly apparent that the Russian claim of Georgia starting the war are a stretch; it is also apparent that the Russian government was very ready.

Tom Lasseter visited the disputed South Ossetian capital of Tskhinvali on Sunday and found little evidence of a massive Georgian bombardment of the city, and not very many deaths.

Russian-backed leaders in South Ossetia have said that 2,100 people died in fighting in Tskhinvali and nearby villages. But a doctor at the city's main hospital, the only one open during the battles that began late on Aug. 7, said the facility recorded just 40 deaths.

...Col. Gen Anatoly Nogovitsyn, the deputy head of the Russian military's general staff, said last Tuesday that "Tskhinvali doesn't exist, it's like Stalingrad was after the war."

But in fact, the city still does exist. While there was extensive damage to some structures, most buildings had front doors on their hinges and standing walls. For every building charred by explosions � the Georgians are accused of using multiple rocket launcher systems � there were others on tree-lined streets that looked untouched.

One government center was hollowed out by blasts, but the one next to it teemed with workers.

The Guardian reports that the South Ossetian government has rounded up 130 Georgian nationals and is holding them in its interior ministry -- for what is unclear, though the article speculates it would be for a prisoner exchange. Interesting, in that South Ossetia is an area with only 70,000 people. How many of them could be captive of the Georgian army? And if there had been a massive bombardment of Tskhinvali, how do they organize this? Seems an odd thing for an area that had been supposedly flattened like Stalingrad to do.

The war started on Friday August 8th; the Black Sea Fleet was reported to arrive off the coast of Georgia on Saturday August 9th. That's pretty impressive, considering it is about 400 nautical miles from Sevastopol to Ochamchire. While the Moskva, Smetlivy, Muromets, and Aleksandrovets can make good speed and make the trip quickly, those ships sailed from Sevastopol with an assortment of support vessels that could only make 12-16 knots, at best. Simple math reveals that would make it a 25 hour trip, meaning the ships would have had to put to sea almost immediately after the fighting began. For any fleet to deploy that quickly is extraordinary readiness.

[An eyewitness report from Sevastopol] "We took up station guarding the opposed landing on the Abkhaz shore when all of a sudden four high speed targets were detected. We sent out an IFF signal and the targets didn't react. Receiving a command from the flagship, we got into formation and right at that moment the unidentified targets opened fire on the ship formation and flagship. The cruiser was damaged and a small fire broke out aboard. Then, fearing for seaworthiness, the flagship withdrew from the firing area."

Moskva and Smetlivy steamed into Novorossysk the next day. All this seems quite well coordinated.

Reactions in other countries have been swift. Ukraine has stepped up, following the Polish lead, by offering to coordinate its radar systems with those of the West. Because of earlier disagreements with Russia, President Yushchenko has now an opening to greater cooperation. Certainly everyone recognizes that the earlier hesitation to admit Georgia and Ukraine to NATO was an error. The interesting thing coming out of Ukraine this weekend, though was this comment by Prime Minister Yulya Tymoshenko -- considered both at odds with Yushchenko and favored by the Russians, to the point of accusations of Russian warchests for her presidential ambitions -- in an excellent interview by Christia Freeland:

For all their sparring, Tymoshenko and Yushchenko have been more united on foreign policy than many expected, with the prime minister moving towards the robust defense of Ukraine's national interest that the president has long espoused. Even before Russia's attack this week on Georgia, she has been measured but forthright in her attitude to the Kremlin.

Tymoshenko also understands that Ukraine's proudest accomplishment - its democratic revolution - makes it a particular target for its authoritarian neighbours. "They fear Ukraine as evidence that a post-Soviet country can quickly and effectively build a rule-of-law society and a democratic society," she says. "And this example is very, very uncomfortable for those who would like to keep everything undemocratic and untransparent."

There is little doubt to whom she is referring as "they". I hope this isn't just Yulka playing to the Western press. As long as those attitudes persist, there is some chance that western missteps in this conflict might not be fatal to their ambitions for the success of the Rose and Orange.

Friday, August 15, 2008

Some Thoughts on Georgia - European Georgia

King has posted on the Georgian situation here and here. While there is much hand-wringing, far too many so-called and wannabe "leaders" are spouting pabulum. Putin believed he could get away with this attack because he's been watching the cowardly press in the west. The bully Russia is back and the outcry is grossly underwhelming.

What can be done? This article by Charles Krauthammer actually lays out actions that can be taken. We do have leverage without sending in our military. As with most bullies, they need to be taught a lesson. If they are not properly taught, they bully again. As I've said before, "Appeasement doesn't work."

However, there is another angle that has not been discussed much - that of tribe. Many Americans have difficulty comprehending tribal cultures, that is, tribal in the ethnic sense. For all the complaining about race, culture, belief, etc. in the USA, we have more people from more nations with more spoken tongues than most anywhere else on earth. We have also learned over time to get along.

Most American immigrants to the USA came because they were of the wrong tribe, religion or social class in their home country. Even the original African slaves were either tricked or kidnapped by other African tribes and sold the the highest bidder - first the Arabs, then the Europeans. Today many Christian Africans come to the USA so as to practice their faith without fear of being hurt. Other immigrants come for jobs, others to get away from civil war (war within cultures in a given location). Previous immigrants also made it a point to take advantage of our education system, learned English, and cherished the opportunity to succeed.

In many parts of the world, these freedoms are not available. Ethnic and tribal groups harbor hatreds, some that go back over 1000 years. They are caught up in a "I'm perfect, better than ________, will get even, etc." mindset.

The situation in Georgia is reminiscent of these historical conflicts. Ethnic groups in this region still cling to old patterns to attack and in Russia's case, destroy a free state. We have a choice: take action, as outlined by Mr. Krauthammer, or revert to letting tribes destroy themselves.

KING ADDS: Janet's writing reminded me of Douglass North, the Nobel Prize winner in Economics in 1993. From his Nobel lecture:

There is no guarantee that the beliefs and institutions that evolve through time will produce economic growth. Let me pose the issue that time presents us by a brief institutional/cognitive story of long-run economic/political change.

As tribes evolved in different physical environments they developed different languages and, with different experiences, different mental models to explain the world around them. The languages and mental models formed the informal constraints that defined the institutional framework of the tribe and were passed down intergenerationally as customs, taboos, and myths that provided cultural continuity.

With growing specialization and division of labor the tribes evolved into polities and economies; the diversity of experience and learning produced increasingly different societies and civilizations with different degrees of success in solving the fundamental economic problem of scarcity. The reason is that as the complexity of the environment increased as human beings became increasingly interdependent, more complex institutional structures were necessary to capture the potential gains from trade. Such evolution requires that the society develop institutions that will permit anonymous, impersonal exchange across time and space.

...Not only has the pace varied over the ages; the change has not been unidirectional. That is not simply a consequence of the decline of individual civilizations; there have been periods of apparent secular stagnation - the most recent being the long hiatus between the end of the Roman Empire in the west and the revival of Western Europe approximately five hundred years later.

But at the end of this lecture, in which North discusses the rise and decline of the USSR and world communism, he includes this point:

It is adaptive rather than allocative efficiency which is the key to long run growth. Successful political/economic systems have evolved flexible institutional structures that can survive the shocks and changes that are a part of successful evolution. But these systems have been a product of long gestation. We do not know how to create adaptive efficiency in the short run.

Krauthammer thinks we can impose that from outside, but we really cannot, at least in the short run. Russia and Georgia are still very young in their existence, and the institutional structures have not developed yet. As North, Wallis and Weingast (2005) noted:

For much of the world, the relevant alternative to the natural state is not an open access order like the United States or France, but a descent into the hell of disorder.

I admit to the pessimism of that quote in regards to Georgia this week.

Thursday, August 14, 2008

Further thoughts about Georgia

Once again, when Ed and I get on a topic, the second topic we plan never gets to air. Georgia dominated our conversation. I wanted to put in a few more thoughts.

First, sources. Readers are invited to explore the Jamestown Foundation, an excellent source of information that I have used since my days in Ukraine. Vladimir Socor has been reporting from Tblisi, and has more than a decade of experience between JF and Radio Free Europe. He writes:

This war is not simply about Georgia; it is far more than a Russia-Georgia conflict. This conflict is about the creation of a �Unbrave New World,� parallel and alternative to the Western world. It would be a domain policed by KGB alumni, regulated by Russian state energy monopolies, and expanded by military force through the incorporation of non-Russian territories. If allowed to expand as it now does in Georgia, this domain will soon become the power base for a direct Russian challenge to Western values and interests.

Readers should also be reading the South Ossetia page from Global Voices, a translation service that is providing us with lots of local reporting from Russians, Georgians (I have seen none explicitly noted as Ossetians) and with much blame to go around. Neither side has provided much protection for civilians, as Ukrainian reporter Ihor Lutsenko reports. There are links to Russian and other language sources for those of you who can read them. One for example is reporting that the casualty figures from Ossetia are largely from Russian sources and appear to be inflated, as one might suspect.

It goes without saying at this point that neither Russia nor Georgia have bathed themselves in glory, but every war starts with a miscalculation. And the initiators more often lose than win. But the question Ed was raising, and the question I would raise with him, is what the West can do now, in particular what sovereignty means in a world where states have spun off of previous countries, with borders not drawn by any treaty. Georgia's boundaries were not the result of any Westphalian peace. They were drawn by Stalin. I need nothing more than to note that the mother of the Russian state is not Moscow but Kiev. (Not for nothing Kievan Rus.)

Georgian boundaries have always had some degree of fluctuation (and not coincidentally mostly in the Ossetian area) as kingdoms came through the middle ages, and the empires of Persia, the Ottomans, the tsars and finally the Soviets. Even in the brief two years of Georgian independence after WWI, the borders were constantly being fought over, with Russia, Armenia, and Turkey.

As I said on the air with Ed, I think what the West has now is a wake-up call. The presidents of Latvia and Lithuania could have spoken in their own languages and brought translators; they spoke in English. (The common language there was Russian, a sign of the problem they share, and for that reason the language nobody dared use.) The history of the region is that smaller states seek protection from larger states when another large, predatory state comes up to their door and seeks to take over. Russia since the fall of the Soviet Union has been able to continue to extract resources from its Near Abroad but not have to pay many people for it (in the terms of Bueno de Mesquita et al., the selectorates in the Near Abroad countries are relatively small compared to the electorates, so paying bribes is easy.) Russia is a predatory state (in the sense Martin McGuire and Mancur Olson once described) that can slough off the provision of public goods to its prey states. I imagine some historian a few centuries from now will look at some of the more Russo-compliant states as vassals quite similar to those of the Middle Ages.

The only strategy for the West to play, if it wants to engage and make good on Bush's promises from the Rose Revolution, is to offer the Near Abroad countries a better deal. Not NATO sometime soon, but now. Not EU later, but ASAP. It can even offer Russia some joint military exercises with NATO to calm nerves. But scared prey can only resist a predator by having the backing of another. Either that or they turn and fight as Georgia tried.

Tuesday, August 12, 2008

Russia, Georgia and Armenia

I'm beyond hope that the situation there will resolve in anything other than the replacement of the current government of Georgia with a puppet regime run by Russia. This has been, after all, the model employed in Armenia to disastrous effect. Unilateral ceasefires and pullouts from pointless alliances are all the Georgian government has left. It has even sunk to blaming NATO for not providing quicker membership; that would have only made the Russians move faster. Ralph Peters points out correctly that this has to have been planned for months now. Stratfor notes this morning on Russia's call for a withdrawal:

The Russians have achieved the desired psychological effect with the West, shattered Georgian self-confidence and set in motion recalculations by other countries in the region. The pacification of Georgia was not on their agenda.

Global Voices has a special page on South Ossetia that should be required reading; GV uses local bloggers and independent reporters for its information, and the news is not filtered. There I found a report that reminded me of a phone call to Hugh Hewitt's show that I thought he handled too cavalierly: the Kosovo precedent. The argument has been brewing almost from the moment Kosovo became independent in February. Contra Austin Bay, it does not really matter whether the country from which the government which to separates is like Milosevic's Serbia.

In Nagorno-Karabakh there was an Armenian enclave in Azerbaijan. With help first of Armenia and then of Russia, it has been an area of Russian influence (through the Minsk Group of the OSCE) since 1994. As such it has insisted on maintaining a presence in both Armenia and N-K, not dissimilar to its role in Abkhazia. It is as Tom Barnett notes:

...whenever something breaks off from something larger, you always find this littler bit inside the smaller entity that identifies more with the larger entity. Saw--and still see--this in the Balkans. Ditto for the Caucasus. Go back a bit farther and you see that Stalin set this up purposefully in many instances, shifting borders just so to trap a chunk of one historical state within another, also purposefully settling Russians for the same effect. Go back even further and you see the Russian empire using the pretext of the "fellow Slavs" needing protection to expand its borders ...

What I see here is Putin working familiar Russian themes for both domestic consumption and signaling to the West that Russia is once again a full-spectrum great power that defends its perceived interests like any other (admittedly, South Ossetia isn't exactly Iraq, but that's what a Russia can muster at this point). Timing is good (end of Bush term, Olympics, Iraq winding down but Afghanistan winding up). Man knows how to pick his moments.

What saddens me today is that Armenians look to Russia as "this littler bit ... that identifies more with the larger entity." We have Armenians and diaspora cheering Russia on, apparently without care that this may doom Armenia to being a satellite of Russia forevermore. We are more worried about sticking it to the Turks (and their Azeri brothers) still than about creating our own nation.